Evercore ISI starts off coverage on Church & Dwight ( NYSE: CHD ) with an In Line rating.
Analyst Robert Ottenstein and team noted that CHD is trading at 23% premium to the staples group and a sizeable 50% premium to the S&P 500 Index, which is said to make the risk-reward trade-off as not as as attractive as other household product stocks.
While CHD was a strong performer during the Great Recession, the U.S. detergent market is noted to be structurally changed and CHD may not benefit as much as it did in 2008-2019 when it impressively outperformed. Evercore ISI think owning the stock requires conviction in accretive acquisitions and strength in the core.
Assumptions on CHD built into the In Line rating and price target of $82 include sales growth of 4-5%, gross margin improvement of 125 bps as cost of surfactants and resins moderate in the back half, pricing taking hold, and Procter & Gamble to continuing to lag Church's price increases in detergent.
The Seeking Alpha Quant Rating on CHD is still flashing Sell.
For further details see:
Church & Dwight attracts cautious initiation from Evercore ISI with valuation still high